The Coalition’s cheap labour 457 visa wage policy is destroying jobs for young Australians lured into studying IT courses under the Turnbull government’s high profile ‘Innovation’ push… Indian 457 visa IT workers are being approved at much lower rates than experienced Australian IT professionals and even new IT graduates.

The Coalition’s cheap labour 457 visa wage policy is destroying jobs for young Australians lured into studying IT courses under the Turnbull government’s high profile ‘Innovation’ push. Job prospects for Australian IT graduates are actually worsening, despite the Turnbull hype.

A new study has found that the proportion of Indian IT professionals granted 457 visas at the minimum 457 salary has more than tripled under the Coalition. These Indian 457 visa IT workers are being approved at much lower rates than experienced Australian IT professionals and even new IT graduates.

The study titled Immigration Overflow: Why it Matters* was published last week by The Australian Population Research Institute (TAPRI). It was co-authored by Bob Birrell, Ernest Healy and me.

IT professionals are the largest single occupation group in the 457 program, comprising 18% of visa grants. Over three-quarters are Indian nationals, nearly all working in Sydney or Melbourne. The 457 minimum salary ‘floor’ is set at $53,900 per year, almost the same as the median starting salary for Australian ICT graduates under age 25 ($54,000).

The two key findings from TAPRI analysis of unpublished 457 salary data are:

Between 2012-13 under Labor and 2014-15 under the Coalition the proportion of Indian 457 IT professionals approved with nominated base salaries at or below the 457 minimum of $53,000 pa in the two main ICT occupations (Analysts and Programmers) increased from 8 per cent to 28 per cent.

In 2014-15, 61 per cent of the Indian 457 IT professionals had a nominated base salary below $70,180 — some $30,000 below average Australian IT professionals’ salaries in 2014 as measured by the ABS (around $100,000 pa). Data for the first 6 months of 2015-16 shows little change in the low wage profile for Indian IT professionals on 457 visas.

Most Indian nationals are sponsored as intra-company transfers by Indian IT services companies with an offshoring business model. For over a decade they have been winning a major chunk of Australia’s IT consulting work. They have succeeded in part because they are paying their 457 visa workers much lower salaries than the market rate for comparable IT professionals in Australia.

The 457 salary data clearly undermines the claims of the National Association of Software and Service Companies (NASSCOM Australia), the Indian IT lobby group. NASSCOM claims that its member IT service companies pay well above the government’s income threshold for 457 wages (the TSMIT, $53,900 pa)). The lobby states that:

Given current and future salary rates in our industry, TSMIT in its current form does not present an issue to our membership, and it is largely redundant to consideration of nomination applications lodged by our members.

The Graduate Destination Survey shows the share of recent Australian graduates in IT who found (any) full-time work by the end of April in the year following graduation has dropped from over 84 per cent in 2008 to around 67 per cent in 2015.

The job market for Australian IT professionals generally is just as bad. Official government figures show 29 applicants for each IT professionals job in 2015-16, nearly double most other professions except engineers.

Solutions

Several measures are needed but the Coalition government will not implement them without being pressured to do so.

The most important is ideally to remove ICT occupations currently in oversupply in Australia from the 457 visa program’s Consolidated Sponsored Occupation List (CSOL), the standard 457-eligible occupation list.

Employers wanting 457 visas for ICT professionals then would need to go through the (theoretically) more rigorous 457 ‘labour agreement’ route. That means negotiating binding commitments to employ Australians and reduce their 457 visa workforce over time.

Given the size and clout of the Indian IT companies (and other multinationals and Australian firms with an India-based IT workforce), the Immigration Minister would need a central role in negotiating these 457 agreements.

Last week Immigration Minister Dutton announced a review of occupations on the 457-eligible list. But he implied the review would focus on culling ‘lower-skilled’ 457 occupations from the list, not ‘skilled’ occupations like IT professionals.

The Coalition might also claim (DFAT certainly will) that ‘skilled’ occupations like IT professionals cannot be removed from the 457-eligible list because of Australia’s ‘international trade obligations’ under FTAs entered into, or trade negotiations currently underway.

Australia has committed in many FTAs (eg with China, Japan, Korea, the TPP) not to apply labour market testing or ‘any economic needs test’ in the 457 program to nationals of the FTA countries.

It remains to be seen whether removing occupations from the 457 list on the grounds of an oversupply in the Australian job market is considered an ‘economic needs test’. There is little doubt that the FTA partner countries will, as will India.

Australia is currently negotiating an FTA with India, known as the ‘Australia-India Comprehensive Economic Cooperation Agreement’. Negotiations stalled somewhat in 2016, but the Trump election and the demise of the Trans Pacific Partnership (TPP) mean all other potential FTAs including the one with India go up the priority list for this government.

The Coalition Government will therefore be keen not to upset the Indian government and business lobby by making life harder for Indian IT firms operating in Australia.

Other measures needed are:

More rigorous enforcement of the 457 employer’s current legal obligation to pay the ‘457 market salary rate’, meaning the salary rate of the ‘equivalent Australian worker’, before 457 visas are granted to IT professionals.

457 sponsors must have a legal obligation to undertake rigorous labour market testing (LMT) when applying for 457 visa workers in ICT professional occupations. ICT professional occupations are currently LMT-exempt in the 457 program only due to Coalition government decisions in November 2013 which can be reversed, by a Legislative Instrument issued by the Immigration Minister.

The 457 minimum salary ‘floor’ (or TSMIT) for ICT occupations should be increased from the current standard minimum ($53,900 pa) to $75,000 per year in 2016 and indexed annually in line with wage movements for ICT professionals in Australia. A higher 457 ICT minimum salary previously applied under both the Coalition and Labor administrations.

Bob Kinnaird is Research Associate with The Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.

Cheap labor neoconservatives that’s there platform. The ugly truth is that cheap-labour conservatives just don’t like working people. They don’t like “bottom up” prosperity, and the reason for it is very simple. “Corporate lords” have a harder time kicking them around. Once you understand this about the cheap-labour conservatives, the real motivation for their policies makes perfect sense. Remember, cheap-labour conservatives believe in social hierarchy and privilege, so the only prosperity they want is limited to them. They want to see absolutely nothing that benefits those who work for an hourly wage. Turnbull is following the platform to the letter!

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